Scott gets tax break, but House Democrats threaten lawsuit

Did Florida legislators pull a fast one on Gov. Rick Scott when they passed a manufacturing tax break late Wednesday but left it in legal limbo?

The proposal, HB-7007, which gives every manufacturer a sales tax exemption on all industrial machines and equipment purchases for three years, was one of only two priorities of the governor. Estimated to save manufacturers about $121 million a year, it passed the House and minutes later the governor responded by signing into law two of the legislature’s top two priorities: an ethics bill and another to revise the state’s campaign finance laws.

But Democrats say the well-choreographed trade-off didn’t get the required two-thirds vote to be constitutional. If the governor signs it as expected, it could draw a lawsuit and be thrown out. It passed on a 68-48 vote, 12 votes short of two-thirds in the 120-member chamber.

“It looks like it’ll be challenged with all due speed,’’ said Rep. Perry Thurston, D-Plantation, the House Democratic leader.

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The Florida Constitution requires that any bill that limits the ability of local governments to raise revenues must pass by two-thirds vote of both the House and Senate unless the revenue impact is “insignificant.”

The manufacturing tax break would cost local municipalities between $20 million and $30 million a year, according to House estimates.

But counties and cities can levy billions in tax revenues each year, so one question is whether $30 million is “insignificant.”

The constitution does not define “insignificant” and the courts have left it an open question.

House Speaker Will Weatherford and Scott’s legal staff are confident they are on safe ground.

“We looked into that very closely,’’ said Weatherford, R-Wesley Chapel, after the House passed the measure following three minutes of debate. “We spoke with our attorneys and our staff. We do not believe it requires two-thirds vote.”

The question may be a moot point. The governor would not comment but his staff, as well as several local government officials, told the Herald/Times that they don’t anticipate a legal challenge.

In addition to the tax break, the bill creates a Small Business Development Center Network, which will be governed by an advisory group of business representatives and work with the state university system. It steers tax revenues to economic development programs, creates a loan guarantee program and carves out an exemption for companies that receive loan guarantees prior to July 1, 2013, imposes steep hurdles for employees to collect unemployment compensation.

The bill also includes a project close to the heart of Senate President Don Gaetz: the creation of a non-profit company known as Gulf Triumph Inc. that will create an endowment from any proceeds from the lawsuit in the Gulf oil spill case.